Roche Wins Ventana with Raised $3.4 Billion Bid

Roche Holding has overcome Ventana's resistance to its takeover bid by raising its price, acquiring the diagnostics maker for $3.4 billion to boost its cancer testing business.

Roche said on Tuesday it would increase the tender offer for all outstanding Ventana Medical Systems shares to $89.50 per share in cash, from $75 per share.

Ventana had repeatedly rebuffed Roche's original bid, calling the offer grossly inadequate, but agreed to open its books to the Swiss company in November.

"The transaction with Roche at $89.50 per share is in the best interests of our shareholders, and we recommend that our shareholders tender into this revised offer," Ventana chief Christopher Gleeson, who will remain as CEO of the business after the deal, said in the statement.

Roche's diagnostics head, Severin Schwan, said the deal would have minimal impact on group margins and earnings per share.

Roche said it would amend its existing tender offer to acquire all outstanding Ventana shares, and the offer would expire on February 7.

Roche has ended up paying a significant premium to recent deals to secure Tucson, Arizona-based Ventana, which the Swiss firm sees as a particularly good fit as it makes tests which could speed up detection of cancer and enhance use of targeted therapies, such as Roche's blockbuster drug Herceptin.

Ventana shares rocketed after Roche made its initial cash offer in June 2007, pitched at a 44 percent premium to what investors had previously thought the company was worth.

Ventana shares have remained above $75 since and closed at $85.33 on Friday, when U.S. markets were last open.

The $75 offer already valued Ventana at a higher multiple than other recent similar deals, including Inverness Medical Innovations's purchase of Biosite and Qiagen's acquisition of Digene.

The original bid valued Ventana at 8.6 times expected 2008 sales, according to data from analyst Bruce Cranna at Leerink Swann, versus 4.6 for Biosite and 6.5 for Digene.

But that is unlikely to cause ripples at cash-rich Roche, which had 24.2 billion Swiss francs ($21.96 billion) in cash at the end of 2006.

Roche, which has made a number of deals to boost its diagnostics unit in the last year, said it will continue to screen that area for more small and mid-sized acquisitions and collaborations.